Rent Control, Mismatch Costs And Search Efficiency

Masahiro Igarashi and Richard Arnott
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Masahiro Igarashi: UNCTAD/ECDC

No 214, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: In the discursive literature on rent control, it has been argued that rent controls cause the rental housing market to become "tighter" -- the vacancy rate falls, search costs rise, and tenants become less well-matched with housing units-but at the same time restrict landlords’ ability to exploit their market power in setting rents. Such phenomena are excluded by assumption in competitive models of the renting housing market. This paper applies a monopolistically competitive model of the rental housing market developed by Igarashi to explore these events. In the model, moderate rent controls are welfare-improving, but severe controls are harmful.

Date: 1993-12
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Journal Article: Rent control, mismatch costs and search efficiency (2000)
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